Crypto Theft: DeFiance Capital Founder Loses $1.6 Million Worth Of NFT In Hot Wallet Hack

In a recent development surrounding crypto stealing, the founder of DeFiance Capital has suffered a loss of about $1.6 million from the hack of one of his wallets, which he emphatically stated that the hackers have “messed with the wrong person.”

Over $1.6 million in NFTs and crypto has been stolen from “Arthur 0x,” the founder of large crypto investment business DeFiance Capital after one of his hot wallets was hacked.

The crypto community has rallied to his aid, offering to help him recover the stolen items after he requested that the hacker’s wallet be blacklisted. Several people on Twitter have attempted to figure out how the attack happened and how the hacker got access to the hacker’s wallets.

“Cirrus,” a member of the NFT community, went so far as to purchase two of the stolen Azuki NFTs and decide to return them to Arthur at no cost. Cirrus said today to Cointelegraph that he:

“found out they were hacked, and instead of selling them for profit like the other folks who got some of his, decided I’d sell them back to him at a cost to help him out.”

Cirrus went on to say that this isn’t the first time anything like this has happened to him. “I could easily go sell them for 6-8 ETH profit,” he explained, “but it’s just not ethical.” His profile says he’s been a victim of rug pulls three times, so his sympathy for his fellow victim is understandable.

A rug pull occurs when a crypto or NFT project shuts down unexpectedly and the value of its token or NFT plummets. Rug tugs are almost often confirmations of a con.

Arthur appears to have misplaced 78 different NFTs from five different collections, the majority of which are Azuki’s. 68 Wrapped Ether (WETH), 4,349 Staked DYDX (stkDYDX), and 1,578 LooksRare (LOOKS) tokens were also taken from him. At around 12:30 a.m. UTC, the hacker began shifting assets, then swiftly put all of the NFTs up for auction on the OpenSea NFT marketplace. The hacker’s wallet held 545 ETH valued at around $1.6 million at the time of writing.

Because even those in the top echelons of the sector can be attacked, this breach emphasizes the significance of operational security when dealing with the self-custody of crypto assets. Arthur, for one, is perplexed as to how this happened to him, writing in a tweet, “Hot wallet on the mobile phone is not safe enough.”

Arthur may not have been protected from this attack if he had utilized a hardware wallet, often known as a cold wallet. A hardware wallet, unlike a hot wallet, is not always linked to the internet. It also protects one’s private key and seed phrase from prying eyes. However, Arthur believes the security issue occurred as a result of an on-chain transaction that could have compromised a hardware wallet.

Scams involving NFTs and cryptocurrencies are always a risk, thus investors should take extra measures with their funds. Serial scammers even develop projects to take advantage of the NFT community, pull the rug out from under them, and move on to the next scam. As Cirrus remarked:

“This is a gold rush for hackers and they’re doing everything they can to come up with new ways to take advantage.”

In light of the hack’s displeasure and annoyance, Arthur had harsh words for the party who took his assets, tweeting, “The only thing I can say to the hacker is: you’ve been messing with the wrong person.”